M/s S.S. Engineers vs Hindustan Petroleum Corporation Ltd. & Ors.

Court

Supreme Court of India

Date

15 July 2022

Case No.

Civil Appeal No. 4583 of 2022

Result

Dismissed

Bench

Indira Banerjee, V. Ramasubramanian

Citation

[2022] 18 S.C.R. 391 : 2022 INSC 1309

Headnote

Insolvency and Bankruptcy Code, 2016 – ss.7-9 – Held: NCLT, exercising powers u/s.7 or s.9, is not a debt collection forum – IBC tackles and/or deals with insolvency and bankruptcy – It is not the object of the IBC that Corporate Insolvency Resolution Process (CIRP) should be initiated to penalize solvent companies for nonpayment of disputed dues claimed by an operational creditor – There are noticeable differences in the IBC between the procedure of initiation of CIRP by a financial creditor and initiation of CIRP by an operational creditor – On a reading of ss.8 and 9, it is patently clear that an Operational Creditor can only trigger the CIRP process, when there is an undisputed debt and a default in payment thereof – If the claim of an operational creditor is undisputed and the operational debt remains unpaid, CIRP must commence, for IBC does not countenance dishonesty or deliberate failure to repay the dues of an Operational Creditor – However, if the debt is disputed, the application of the Operational Creditor for initiation of CIRP must be dismissed – In the present case, there was a pre-existing dispute with regard to the alleged claim of the appellant-Operational Creditor against HPCL (respondent no.1) or its wholly owned subsidiary HBL – Adjudicating Authority (NCLT) clearly fell in error in admitting the application filed by the appellant u/s.9 as Operational Creditor, for initiation of the CIRP against HBL – NCLAT rightly allowed the appeal filed on behalf of HBL – No grounds to interfere with the impugned judgment of the NCLAT. Mobilox Innovations Private Limited v. Kirusa Software Private Limited (2018) 1 SCC 353 : [2017] 10 SCR 1006; K Kishan vs. Vijay Nirman Co. (P) Ltd. (2018)

17 SCC 662 : [2018] 10 SCR 959 – relied on.

The following Order of the Court was passed: ORDER This appeal is against a judgment and order dated 10th January, 2022 passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi allowing Company Appeal (AT)(Insolvency) No. 332 of 2020 filed by the Respondent No.1 Hindustan Petroleum Corporation Limited (HPCL) and setting aside the order dated 12.02.2020 passed by the National Company Law Tribunal (NCLT), Kolkata, admitting an application filed by the appellant under Section 9 of the Insolvency and Bankruptcy Code (IBC) as Operational Creditor, for initiation of the Co

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